The offer from Cobalt Video Holdco LLC is a so-called "stalking horse" bid, which Blockbuster hopes will attract other bidders who will offer more.
The Cobalt group includes funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Värde Partners Inc. They all hold secured Blockbuster debt, so they stand to benefit if someone else buys the company for more than the amount they paid for their Blockbuster debt.
The deal needs approval from the federal bankruptcy judge overseeing Blockbuster's reorganization. The company said other bidders would have 30 days after the process is approved by the judge to submit their own bids. That would prompt an auction, the company said.
Earlier this month, the Wall Street Journal reported that Blockbuster planned to put itself up for sale after a disagreement with its creditors.
Blockbuster didn't address that directly on Monday. But Chairman and CEO Jim Keyes said in a statement that an auction "will allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster's future."
Blockbuster used to be the dominant U.S. movie rental chain. But it lost money for years as customers shifted to Netflix Inc., video on demand and DVD rental kiosks. When it filed for bankruptcy protection in September it was down to 3,000 stores. In December, the chain said it planned to close 182 stores in the next few months.